Question
In: Finance
Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is...
Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is considering the following project:
The project will last 5.00 years with an annual cash flow of $40.00 million. The project will require an initial investment of $140.00 million
The firm must determine the cost of capital to evaluate the project. (The project is within the firm’s normal activities)
Ramblin Wreck, Inc. Financial Data:
| STOCK DATA: | BOND DATA: | ||
|---|---|---|---|
| Current Price Per Share | $29.00 | Current Price Per Bond | $924.00 |
| # of Shares | 2.00 million | # of bonds | 20,000.00 |
| Book Value | $50 million | Annual Coupon Rate | 8.00% |
| Face Value Per Bond | $1,000 | ||
| Maturity | 10 years |
The risk free rate in the economy is currently 2.00%, while
investors have a market risk premium of 6.00%. Ramblin Wreck, Inc.
has a beta of 1.44. The tax rate is 38.00%.
What is the WACC for the project?
Submit
Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is...
Ramblin Wreck is a firm specializing in engineering components.
The firm is publicly traded and is considering the following
project: The project will last 5.00 years with an annual cash flow
of $40.00 million. The project will require an initial investment
of $140.00 million The firm must determine the cost of capital to
evaluate the project. (The project is within the firm’s normal
activities) Ramblin Wreck, Inc. Financial Data: STOCK DATA: BOND
DATA: Current Price Per Share $30.00 Current Price...
Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is...
Ramblin Wreck is a firm specializing in engineering components.
The firm is publicly traded and is considering the following
project:
The project will last 5.00 years with an annual cash flow of
$40.00 million. The project will require an initial investment of
$140.00 million
The firm must determine the cost of capital to evaluate the
project. (The project is within the firm’s normal activities)
Ramblin Wreck, Inc. Financial Data:
STOCK DATA:
BOND DATA:
Current Price Per Share
$29.00
Current Price...
Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is...
Ramblin Wreck is a firm specializing in engineering components.
The firm is publicly traded and is considering the following
project:
The project will last 5.00 years with an annual cash flow of
$40.00 million. The project will require an initial investment of
$140.00 million
The firm must determine the cost of capital to evaluate the
project. (The project is within the firm’s normal activities)
Ramblin Wreck, Inc. Financial Data:
STOCK DATA:
BOND DATA:
Current Price Per Share
$28.00
Current Price...
Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is...
Ramblin Wreck is a firm specializing in engineering components.
The firm is publicly traded and is considering the following
project:
The project will last 5.00 years with an annual cash flow of
$40.00 million. The project will require an initial investment of
$140.00 million
The firm must determine the cost of capital to evaluate the
project. (The project is within the firm’s normal activities)
Ramblin Wreck, Inc. Financial Data:
STOCK DATA:
BOND DATA:
Current Price Per Share
$29.00
Current Price...
Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is...
Ramblin Wreck is a firm specializing in engineering components.
The firm is publicly traded and is considering the following
project:
The project will last 5.00 years with an annual cash flow of
$40.00 million. The project will require an initial investment of
$140.00 million
The firm must determine the cost of capital to evaluate the
project. (The project is within the firm’s normal activities)
Ramblin Wreck, Inc. Financial Data:
STOCK DATA:
BOND DATA:
Current Price Per Share
$28.00
Current Price...
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